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Revolutionize food supply chains with Blockchain technology

Blockchain is an emerging technology in today’s supply chains. Its Transparency, Accountability, Security and Interoperability features have improved the productivity and end to end visibility of food supply chains.

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The technology behind Bitcoin and other cryptocurrencies, Blockchain is transforming supply chains, industries, and ecosystems by solving their most urgent problem of lack of visibility ad transparency in real-time. 

The market for Blockchain in the supply chain is predicted to grow from $253 million in 2020 to over $3 billion by 2026. This data-powered solution aids supply chain management not only by offering complete traceability of a product or raw material from its source to the end consumer, but by improving coordination between partners, easing access to financing, and by eliminating unnecessary intermediaries, which saves time and costs and opens the door to smarter, faster, and more secure supply chains. 

Food supply chains are particularly challenging and potentially dangerous to consumers’ health and wellbeing, which is why Blockchain traceability solutions have become an essential tool for this industry. Read on to know how Blockchain traceability works and how it’s combating the main challenges of supply chains.

What are the five main challenges for supply chains? 

1) Lack of end-to-end visibility 

Lack of transparency is a common problem in cross-industry supply chains. It can cause cost and customer relationship problems and damage a brand’s reputation.   

Solution: Blockchain technology provide a solution that allows the traceability of product provenance, in which participants in the system, including suppliers, manufacturers, transporters, and end customers, can access this information, which helps in building trust between them. 

2) Inefficient supply chain risk management 

Company processes are often exposed to different types of risks, such as fraud and code of conduct violations. Effective risk management programs are crucial for the effective supply chain management. 

Solution: Blockchain enables accurate tracking of products, which helps predict many risks in the chain and allows all participants to act accordingly. 

3) Ripple effect due to the extension of the value chain. 

Due to complex and ever-expanding supply chains, many organizations face significant variability risks at different moments and processing levels. 

Solution: Blockchain offers scalability through which any extensive database is accessible from multiple locations worldwide. 

4) Sudden demand changes 

The rapidly changing environment requires companies to respond to sudden changes in demand with increasing frequency. It requires technology to automate processes and adjust them promptly to necessary changes. 

Solution: Blockchain-enabled supply chain management can help reduce errors, avoid product delays, eliminate fraudulent activities and increase consumer and supplier confidence.  

5) Sustainability Requirements 

Supply chains globally face huge customer demands in the form of product sustainability assurance. 

Solution: Blockchain can identify and avoid counterfeits, fake transactions,  effectively tracking/tracing product origin and supply chain activities at the same time that eases paperwork processing.

How do Blockchain works?

Simply put, Blockchain is defined as a decentralized and distributed ledger system that keeps all records of transactions between members within a peer-to-peer network in immutable records called blocks, which are secured using cryptography. The data stored in a chain of blocks can be transferred securely as ​​data requires digital signatures for authentication. 

Blockchain can be characterized through five principles: Security, Peer-to-peer transmission, transparency,  irreversibility of records, and computational logic. 

Beyond its use in financial transactions, Blockchain has begun to revolutionize sectors such as energy, education, pharmaceutical, and food, among many others, with the latter having the potential to better manage and reduce its burden on the ecosystem and help in tackling food safety issues. 

How can Blockchain improve food supply chains?

For any supply chain to be efficient and competitive, there must be a mutual collaboration between its links in real-time and complete transparency.  

In the face of globalization and at a time when supply chains worldwide are facing increasing demands from customers in the form of product sustainability assurance, the world’s supply chains have been put to the test to make their processes more efficient without sacrificing quality and to ensure that the actors involved in their supply chain do not engage in harmful practices. 

In recent years, the food sector has been one of the favorites to be aided by blockchain traceability solutions because of its environmental impact (it generates one-quarter of the world’s greenhouse gas emissions)  and the growing wave of food fraud cases linked to foodborne illnesses worldwide. According to  a 2016 World Bank report, 

Foodborne illness is a major public health problem. It costs $7.4 billion annually in productivity losses to society, overburdening health systems, and reducing economic development due to loss of confidence in food production and the retail system. 

Although Food fraud is worldwide and affects all types of food,  there is a group formed by 12 foods that have a higher risk of fraud by mislabeling or counterfeiting: fruit juices, olive oil, spices, coffee, honey,  maple syrup, fish, tea, milk, organic food, wine, rice, and meat. 

Not surprisingly, the first corporations to use Blockchain traceability solutions in their supply chain trade (Unilever, Carrefour,  Cargill, Nestlé, Dole, Walmart) were involved in these types of food groups. 

Blockchain food traceability solutions can help track food sources in foodborne illness cases, detect food fraud and limit food waste. So that the entire processes are recorded in a decentralized, fully digital, visible, and tamper-proof ledger, creating a secure and resilient supply chain.

How can Blockchain ensure data quality and integrity in supply chain traceability? 

It utilizes the power of IoT & AI (satellite data analytics of plantation & weather data, visual assaying, track and trace in warehouses, cold storage, etc.), digitization of certification processes (e.g., phytosanitary inspections, certification inspections), and offers real-time actionable insights and data-driven decision workflows.  It allows simplified propagation of actionable insights across the network as a collaborative platform, enabling unified communication within minutes of details being captured and shared. 

What is the future of blockchain in agriculture? 

In addition to the great potential that blockchain traceability presents for achieving food security as well as the sustainability of supply chains, it can also address the main challenge for farmers, which is access to finance and agricultural markets by increasing levels of trust among the relevant counterparty to access credits, a technological intervention known as Agri fintech. 

Approximately 30% of Indian farmers have access to institutional credit, while the remaining 70% rely on informal and high-cost credit. 

The reliance on high-cost credit means that the weighted average cost of capital (WACC) for an average Indian farm (of about 1 hectare) is more than 20% per year, making farm economics unlikely to succeed for more than 85% of India’s farms, which are small and marginal (area <2 hectares). 

The challenges bankers face in farmer financing are mainly due to the lack of data, market linkages, and the high transactional cost of lending and recovery. 

Blockchain can address these challenges by providing a “3D” approach: data, digitalization, and demand; The first two “D´s” respond to key data elements that are recorded and digitized, such as farm and farmer identity, soil health, input use,  product quality​​, among many others,  which can help bankers assess, monitor and mitigate risks for underwriting loans.  

When it comes to demand, the third “D,” Blockchain can drive farmers financial inclusion with confirmed demand and market linkages, which, unlike the conventional collateral-based financing approach, is based on cash flow for working capital needs and made viable with confirmed purchase orders from credible buyers; this not only allows the farmers access to credit but also to quality inputs and advice. 

By providing a secure way of storing and managing data,  Blockchain traceability creates trust and accountability among market players that bring new efficiencies in agricultural supply chains. 

How is blockchain in supply chains better than a regular system? 

Efficient 

Blockchain can significantly improve the way food is tracked, transported, or sold by maintaining every digital transaction record. It can overcome inaccuracies caused by traditional paper-based cases of any food recall or investigation; the process could be carried out seamlessly as Blockchain offers end-to-end traceability. 

Immutable 

All the information provided to the Blockchain is accepted only if authenticated. This authentication is delivered in the form of an unforgeable digital signature: a cryptographic mechanism allows someone to demonstrate their identity without enabling someone else to impersonate them in the future. 

Decentralized 

Blockchain traceability enables a new world of decentralized communication and coordination by building the framework that allows peers to safely and quickly connect within minutes without a centralized intermediary. 

What are some blockchain startups in the food industry?

Bart.Digitalagr: The Brazilian industry has used this technology in the financial transactions of small coffee producers.  

Provenance: This British company uses blockchain food traceability to ensure transparency in food supply and prevent illegal fishing. 

Arc-Net: The Irish platform integrates blockchain food traceability to manage problems related to food fraud. 

AgriDigital: Headquartered in Australia, It is a management software that allows farmers and small entrepreneurs to sell their products by securing the transaction through Blockchain. 

TraceX Technologies: This Indian digital agriculture platform leverages blockchain to connect multiple participants in the food and agricultural supply chain and help them securely exchange verifiable and auditable data. 

ZhongAn Technology:  Chinese company that uses blockchain food traceability to track chickens’ origin and marketing chain. 

Blockchain traceability is revolutionizing supply chains through a new quality of trust and automation that improves fluidity and reduces costs in supply chains.  Integrating blockchain ensures Instant traceability for greater transparency to enhance security and expose weaknesses in any supply chain network. 


If you are looking to improve the efficiency of your food supply chain, then check out how Blockchain traceability solution, TraceX, can help.